Gov. Ige addresses reduced revenue forecast in State of the State

With a reduced revenue forecast for the state, Gov. David Ige said in his third State of the State address Monday that adjustments will have to be made to reflect the slowed growth.

“A month ago, the revenue forecast for the current fiscal year was a robust 5.5 percent increase.” the governor said. “Two weeks ago, it was reduced to 3 percent, resulting in an anticipated loss of more than $330 million over the biennium. Actual revenues collected for the first half of the year grew by less than 1 percent, signaling that growth in our economy has slowed.”

In light of that, Gov. Ige said he will be submitting a proposal to phase-in increased payments to the retirement system “to ensure that we can keep our promises to our retirees in a responsible way.” Wage increases are being planned for public employees but “we cannot presuppose what agreement will be reached.”

Other topics the governor addressed during his speech:

Transforming our Schools

The governor’s budget will reflect an increase in funding — more than $700 million in new schools, classrooms, science facilities, and repair and maintenance, as well as $150 million for university facilities, statewide.

“Schools need to be able to design their own programs, implement their plans, and be accountable for the results,” he said, “and they need to be encouraged to take risks and be creative.”

Gov. Ige cited a national study that predicts 70 percent of Hawaii’s jobs will require some post-secondary education by 2020. Because of that, he is proposing an expansion of the Early College Program that allows high school students to earn college credits.

Reshaping the economy to allow for more innovation

The governor said “the innovation sector offers the best promise of high-quality, high-wage jobs for our children,” which is a reason why he is requesting from the Legislature additional funding for the Hi Growth program that fosters and accelerates entrepreneurism.

“About 145 start-ups have gone through the accelerator programs,” he said. “With a $10 million investment, the start-ups have generated over $250 million in total capital.”

Affordable housing and addressing homelessness

The governor is asking the state housing agencies to focus on producing more rental units due to the increased need. “We’ve produced a total of 1,050 units in the past two years,” he said, “with over 4,000 more in the pipeline, 80 percent of which will be rentals.”

His budget for the next two years proposes an investment of $123.4 million to promote new housing starts.

In addressing the ongoing homelessness issue, Gov. Ige’s budget includes $20.9 million each year for rent subsidies, supportive services, outreach services and enforcement.

“A new family assessment center was opened last September to connect homeless individuals and families to services and help them transition into permanent housing,” he said, “and that’s always been our ultimate goal. This is about more than increasing shelter beds, but finding people permanent housing. That’s why the budget before you includes $59 million for public housing improvements.”

Afterwards, House Speaker Joseph Souki said the governor’s speech did not contain any real surprises, but he expressed his pleasure in it showing support for education, rail on Oahu and making adjustments to the administration’s proposed state budget.

Souki said even though the Council on Revenues predicts less tax income for the state in the near future, the three basic elements of our economy – tourism, military support and construction – all are performing strong right now.

House Majority Leader Scott Saiki said he supports the governor’s goal of investing to create a better school system, but hopes to see the details of his plan flushed out in the bills he submits to the Legislature.

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